Busy times at Great Portland
Great Portland Estates has today announced two major deals – the acquisition of a 2.3 acre West End redevelopment site and the £132.75m purchase, through its joint venture with the BP pension fund, of the ITN building on Gray’s Inn Road in London.
The group has bought the West End property from Royal Mail for £120m and has leased it back to the postal operator until 2013 for a total net rent of £4.6m. The large site is between Rathbone Street and Newman Street, just 50 yards away from Oxford Street. Once Royal Mail has vacated the site at the end of the lease, GPE plans to undertake a major redevelopment. Royal Mail submitted plans earlier this year to develop offices, residential and retail properties on the site. GPE plans to withdraw this application immediately after the deal is completed – expected to be on 22 September – and to start work on a new proposal, which it aims to submit next year.
Property Week comments today that GPE has seen off competition for the site from Development Securities, British Land and Land Securities in securing the site, which has long been coveted by various developers.
GPE’s chief executive Toby Courtauld said the redevelopment would “accelerate the regeneration of the East End of Oxford Street, one of London’s most exciting submarkets, which is set to benefit significantly from the opening of Crossrail.”
The group’s other announced deal today is also expected to benefit from the impact of the Crossrail and Thameslink projects as well as continued development in the Kings Cross/St Pancras area. GPE’s Great Ropemaker Partnership joint venture with the BP pension fund has purchased 200 and 214 Gray’s Inn Road, at a price reflecting a capital value of £455 per sq ft and an initial yield of 6.4%.
200 Gray’s Inn Road is a 246,500 sq ft Grade A office building over 10 floors, while No. 214 comprises 45,500 sq ft of car parking and back-up space to No. 200. The main building is held virtual freehold and is leased to four tenants including Carlton Communications and ITN at £8.42m per annum. The leases expire between 2017 and 2023, with significant rent reviews in 2011 and 2013, and a weighted average unexpired lease term of 6.8 years, GPE said. The building at 214 Gray’s Inn Road is mainly let to ITN until 2023 at a rent of £500,000 per annum. It is held long leasehold expiring June 2174 at a peppercorn rent, the company added.
